{"id":77586,"date":"2018-02-20T23:50:30","date_gmt":"2018-02-20T23:50:30","guid":{"rendered":"https:\/\/writemyessayfree.com\/ao-companys-income-statement-for-the-year-ended-2014"},"modified":"2017-08-18T07:15:13","modified_gmt":"2017-08-18T07:15:13","slug":"ao-companys-income-statement-for-the-year-ended-2014","status":"publish","type":"post","link":"https:\/\/www.benedictsol.com\/blogs\/ao-companys-income-statement-for-the-year-ended-2014\/","title":{"rendered":"A&O Companys income statement for the year ended 2014"},"content":{"rendered":"

Please see instructions on the answer sheet provided before completing the quiz.<\/span><\/strong><\/p>\n

Question 1 (3 points\u201425 minutes)<\/strong><\/p>\n

The following partial information is available from the A&O Company\u2019s income statement for the year ended 2014:<\/p>\n\n\n\n\n\n\n\n\n
Sales<\/td>\n$ 940,000<\/td>\n<\/tr>\n
All operating expenses except depreciation<\/td>\n624,000<\/td>\n<\/tr>\n
Depreciation expense<\/td>\n60,000<\/td>\n<\/tr>\n
Loss on sale of equipment<\/td>\n26,000<\/td>\n<\/tr>\n
Income tax expense<\/td>\n42,000<\/td>\n<\/tr>\n
Net Income<\/td>\n145,000<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

In addition, partial information from A&O\u2019s Balance Sheets for the year ending 2013 and 2014 is as follows:<\/p>\n\n\n\n\n\n\n
<\/td>\n2013<\/td>\n2014<\/td>\n<\/tr>\n
Accounts Receivable<\/td>\n$94,000<\/td>\n$67,000<\/td>\n<\/tr>\n
Accounts Payable for operating expenses<\/td>\n41,000<\/td>\n51,000<\/td>\n<\/tr>\n
Income Taxes Payable<\/td>\n8,500<\/td>\n4,000<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Instructions:<\/strong><\/p>\n

a) Direct Method: Calculate cash received in 2014 from customers.<\/p>\n

b) Direct Method: Calculate cash paid for operating expenses in 2014<\/p>\n

c) Indirect Method: Prepare the operating activities section of the statement of cash flows.<\/p>\n

Question 2 (3 points\u201425 minutes)<\/strong><\/p>\n

A&O Corporation contracted to build an office building for $50,000,000. Construction began in 2014 and is expected to be completed in 2016. Data for 2014 and 2015 are:<\/p>\n\n\n\n\n\n\n\n
<\/td>\n2014<\/td>\n2015<\/td>\n<\/tr>\n
Costs incurred to date<\/td>\n$14,600,000<\/td>\n$30,600,000<\/td>\n<\/tr>\n
Estimated costs to complete<\/td>\n25,400,000<\/td>\n9,400,000<\/td>\n<\/tr>\n
Progress billings to date<\/td>\n13,900,000<\/td>\n30,000,000<\/td>\n<\/tr>\n
Cash collected to date<\/td>\n13,000,000<\/td>\n29,300,000<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

A&O uses the percentage-of-completion method.<\/p>\n

Instructions:<\/h5>\n

(a) Calculate the gross profit recognized in 2014.<\/p>\n

(b) Calculate the gross profit recognized in 2015.<\/p>\n

(c) Calculate the revenue recognized in 2015.<\/p>\n

(d) Prepare one journal entry to record the construction expense, revenue, and gross profit in 2015<\/p>\n

Question 3 (4 points\u201415 minutes<\/strong>)<\/p>\n

Select the best answer for each of the following and write the letter corresponding to your answer in the answer sheet provided.<\/p>\n

1. Assume that, at year-end, the fair value of investments held by VAP Co. is $104,000 and the carrying amount is $110,000. There is a zero prior balance in fair value adjustment account. Which of the following statements would be correct for the year-end adjusting entry?<\/p>\n

a. VAP will debit $6,000 to Unrealized Holding Gain or Loss- Income if the investment is in available for sale debt securities<\/p>\n

b. VAP will credit $6,000 to Unrealized Holding Gain or Loss- Income if the investment is in available for sale debt securities<\/p>\n

c. VAP will debit $6,000 to Unrealized Holding Gain or Loss- equity if the investment is in available for sale debt securities<\/p>\n

d. VAP will credit $6,000 to Unrealized Holding Gain or Loss- Income if the investment is in trading securities<\/p>\n

2. Which of the following statements is correct?<\/p>\n

a. Unrealized holding gains or losses on held to maturity debt securities are reported as a separate component of stockholders\u2019 equity<\/p>\n

b. Trading securities are reported at fair value and available for sale debt securities are reported at amortized cost<\/p>\n

c. Unrealized holding gains or losses on available for sale debt securities are reported as a separate component of stockholders\u2019 equity, but such gain or losses are not recognized for held to maturity debt securities.<\/p>\n

d. Held to maturity debt securities and available for sale debt securities are reported at amortized cost.<\/p>\n

3. Unrealized holding gains and losses on investments in equity<\/span> securities accounted for using the equity method are<\/p>\n

a. Recognized in net income<\/p>\n

b. Not recognized<\/p>\n

c. Recognized as other comprehensive income and as a separate component of stockholders\u2019 equity<\/p>\n

d. All of the above statements are incorrect.<\/p>\n

4. Which of the following statements is correct?<\/p>\n

a. A refund liability is recorded by the consignee upon receipt of the goods on consignment.<\/p>\n

b. When goods are sold with a right of return, the transaction is recorded as a repurchase agreement.<\/p>\n

c. Service type warranties are recorded as a separate performance obligation.<\/p>\n

d. Assurance type warranties are recorded as a separate performance obligation.<\/p>\n

5. A contract modification is accounted for using a prospective approach if<\/p>\n

a. The promised goods or services are distinct.<\/p>\n

b. The company has the right to receive an amount equal to the standalone price.<\/p>\n

c. The new products are not priced at the proper standalone price or if they are not distinct.<\/p>\n

d. Both a and b are correct.<\/p>\n

6. When using the indirect method to prepare the operating section of a statement of cash flows, which of the following is subtracted from net income to compute cash flow from operating activities?<\/p>\n

a. Decrease in accounts receivable.<\/p>\n

b. Gain on sale of land.<\/p>\n

c. Amortization of patent.<\/p>\n

d. Increase in accounts payable.<\/p>\n

7. Under the quantitative test, a segment is considered reportable if<\/p>\n

a. Both the segment revenues are 10% or more of the combined revenues (excluding intersegment revenue) of all segments, and<\/span> the Identifiable assets are 10% or more of the combined assets of all segments.<\/p>\n

b. Both the segment revenues are 10% or more of the combined revenues (excluding intersegment revenue) of all segments, and<\/span> the net profit (loss) is 10% or more of the combined net profit or loss.<\/p>\n

c. The absolute amount of a segment\u2019s profit or loss is 10% or more of the greater (in absolute amount) of the combined operating profit of all segments or the combined operating loss of all segments that reported a loss.<\/p>\n

d. Both a and b are correct.<\/p>\n

8. Which of the following statements is correct, with respect to interim reporting?<\/p>\n

a. Under the discrete approach each interim period is treated as an integral part of the annual report<\/p>\n

b. Under the integral approach each interim period is treated as an integral part of the annual report<\/p>\n

c. Under the integral approach each interim period is treated as a separate accounting period<\/p>\n

d. All of the above statements are incorrect<\/p>\n

Question 4 (5 points\u201420 minutes<\/strong>)<\/p>\n

Show computations for each of the following, and clearly show your final answer using the answer sheet provided.<\/p>\n

1. VAP company enters into a contract with a customer to build a factory for $1,000,000 on January 10, 2014 with a performance bonus of $100,000 if the factory is completed by August 31, 2014. The bonus is reduced by $10,000 each week that completion is delayed. VAP commonly includes these completion bonuses in its contracts and, based on prior experience, estimates the following completion outcomes:<\/p>\n\n\n\n\n\n\n\n
Completed by<\/td>\nProbability<\/td>\n<\/tr>\n
August 31, 2014<\/td>\n80%<\/td>\n<\/tr>\n
September 7, 2014<\/td>\n10%<\/td>\n<\/tr>\n
September 14, 2014<\/td>\n7%<\/td>\n<\/tr>\n
September 21, 2014<\/td>\n3%<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Show calculations to determine the transaction price for this contract.<\/p>\n

2. PVP Company sells products to customers with an unconditional right of return if they are not satisfied. The right of returns extends 30 days. On March 10, 2014, a customer purchases $20,000 of products (cost $12.000) paying cash. Assuming that based on prior experience estimated returns are 4%, prepare the journal entries to record (1) the sale and (2) cost of goods sold and the estimated inventory returns.<\/p>\n

3. The following information is provided for A&E Company, which uses the equity method.<\/p>\n

\u00b7 On January 1, 2014, A&E Company acquired 100,000 shares of PVP, Inc. (representing 30 percent ownership and significant influence) common stock at a cost of $15 per share.<\/p>\n

\u00b7 For the year 2014, PVP, Inc. reported net income of $500,000.<\/p>\n

\u00b7 On January 28, 2015, PVP, Inc. announced and paid a cash dividend of $100,000.<\/p>\n

\u00b7 For the year 2015, PVP Inc. reported a net loss of $100,000.<\/p>\n

Calculate the balance in the Investment in PVP Stock account as of the end of 12\/31\/2015.<\/p>\n

4. On December 31, 2014, A&E Co. provided the following information regarding its trading securities:<\/p>\n\n\n\n\n\n\n\n\n\n
Investments<\/td>\nCost<\/td>\nFair Value<\/td>\nUnrealized gain\/(loss)<\/td>\n<\/tr>\n
A company<\/td>\n$40,000<\/td>\n$36,000<\/td>\n<\/td>\n<\/tr>\n
B company<\/td>\n$25,000<\/td>\n$20,000<\/td>\n<\/td>\n<\/tr>\n
C company<\/td>\n$25,000<\/td>\n$30,000<\/td>\n<\/td>\n<\/tr>\n
Totals<\/strong><\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/tr>\n
Previous market adjustment balance<\/strong><\/td>\n$( 1,000)<\/strong><\/td>\n<\/tr>\n
<\/td>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Show computations and prepare an adjusting journal entry on December 31, 2014.<\/p>\n

5. AM Company provided the following information on selected transactions during 2014:<\/p>\n

Dividends paid to preferred stockholders $ 150,000<\/p>\n

Loans made to other corporations 500,000<\/p>\n

Proceeds from issuing bonds 900,000<\/p>\n

Proceeds from issuing preferred stock 1,050,000<\/p>\n

Proceeds from sale of equipment 1,000,000<\/p>\n

Purchase of land by issuing bonds 300,000<\/p>\n

Show calculations for net cash provided (used) by (a) investing activities and (b) financing activities during 2014.<\/p>\n

Click here to have a similar paper done for you by one of our writers within the set deadline at a discounted<\/a>\u2026<\/i><\/p>\n","protected":false},"excerpt":{"rendered":"

Please see instructions on the answer sheet provided before completing the quiz. Question 1 (3 points\u201425 minutes) The following partial information is available from the A&O Company\u2019s income statement for the year ended 2014: Sales $ 940,000 All operating expenses Read More …<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-77586","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/posts\/77586","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/comments?post=77586"}],"version-history":[{"count":0,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/posts\/77586\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/media?parent=77586"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/categories?post=77586"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/tags?post=77586"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}